Global Economics

Medvedev Pushes Russia to Go Green

Russia once prided itself on industrial prowess, never mind the pollution. But now President Dmitry Medvedev aims to cut energy use by 40% in the next decade

Sometimes, Dmitry Medvedev has to be brusque. Last Wednesday, the Russian president found it necessary to reprimand his audience in front of national television cameras for talking during his speech. "Whoever's chatting can go somewhere else. And that includes the bosses," he said. Medvedev is not accustomed to being ignored.

The problem may have been his choice of subject. The normally stoic Kremlin boss had been giving a speech on his new favorite subject: energy efficiency. It is not a topic that generally receives much attention in Russia.

Which is hardly a surprise. Medvedev's predecessor Vladimir Putin was quick to shut down the State Committee for the Protection of the Environment soon after entering office in 2000. At the time, the nation prided itself on its natural gas fields and smoking chimneys—symbols of the country's renewed status as a global power. Only sissies worried about climate change and carbon dioxide emissions.

These days however, Moscow's rich and powerful must acquaint themselves with a new set of priorities—those of the man who took office in May 2008. Medvedev is now hell-bent on modernizing the Russian economy, an undertaking which has implications for the oil and gas industry. The Russian president wants to make his country a superpower in energy efficiency.

Superfluous Gas Torched

Medvedev's choice of location to hold forth on his eco-friendly project was replete with symbolism: the Kurchatov Institute, Russia's leading research and development facility in the field of nuclear energy and birthplace of the Soviet atomic bomb. It was here, in 1949, that researchers developed the nuclear weapons that would launch the USSR to superpower status. Now, Medvedev hopes Kurchatov researchers can develop technologies that will curb Russia's voracious appetite for energy.

Currently, the country consumes vast quantities of energy, the result of outdated and inefficient factories coupled with subsidized energy prices. Even today, many Russians are forced to open windows in the middle of winter to combat hyper-charged district heating systems. The Siberian sky is lit up by the bright flames of gas fields as excess gas is simply burned off.

Last week, Medvedev spoke of a "depressing situation." Russian factories use up four or five times more energy than their Western counterparts. In addition, district heating systems are profoundly wasteful, with much of the heat being lost before it even reaches consumers. In mid-September, Medvedev wrote a much-read article in which he stated that "the energy efficiency of the majority of our companies is shamefully low."

'Nothing Has Happened'

Medvedev's plan is ambitious. By 2020, he wants to cut Russian energy consumption by 40 percent, a goal he outlined in his speech on Wednesday, attended by the likes of Finance Minister Alexei Kudrin, Economic Development Minister Elvira Nabiullina and Russia's richest man, Mikhail Prochorow. Even Deputy Prime Minister Igor Sechin, who, thanks to his position is also chairman of the board at the national oil company Rosneft, was taking detailed notes.

Medvedev's message was simple: "Those who save energy, save money." He is hoping to pass energy conservation legislation by the end of October.

Russia is now looking towards Germany for assistance in meeting its efficiency goals. In July, Medvedev and German Chancellor Angela Merkel established the "Russian-German Energy Agency" in Munich.

"This is the first important step for getting vital technology into the country. It also shows, however, that Russia simply does not yet have the necessary know-how," explains Stefan Meister, an expert on Russia at the German Council on Foreign Relations (DGAP).

Meister points out that it is also unclear how Medvedev intends to finance expensive projects such as swapping out incandescent lightbulbs for more energy-efficient bulbs nationwide. "Which business incentives will be used? How does one encourage large companies to save energy? These questions remain completely unanswered," Meister said.

President Medvedev, as his speech made clear, is aware of the problem. However few concrete steps have been taken to date. "So far," says Meister, "nothing has happened."